In recent years, the world has entered an acute phase of geopolitical confrontation, driven by structural problems such as trade imbalances. Historically, such crises have often been addressed through military conflicts aimed at weakening rivals and redirecting financial and trade flows. This logic is examined in The Price of War, a study of conflicts spanning over 150 years.

Since most major powers today possess weapons of mass destruction for deterrence, confrontation has largely taken on a hybrid form. Yet the United States’ drive to solve domestic problems at others’ expense remains, especially in its relations with China, Russia and the European Union. The toolbox of weapons has expanded to include economic tools such as tariffs or tech restrictions designed to limit the development of highly value-added industries.
The White House might be confident about this arsenal, but US President Donald Trump’s policies of tariffs, tax cuts and pressure on the US Federal Reserve have coincided with a weakening US dollar. Meanwhile, efforts to reduce the trade deficit have diminished both Washington’s global role and overall investor confidence.

The US dollar remains Washington’s key economic weapon. But its declining status weakens US geopolitical influence. Since 2000, the US dollar’s share in global reserves has fallen from 71 per cent to below 60 per cent. A recent study by the International Monetary Fund suggests that in times of rising global tension, countries diversify their currency holdings.

The S&P 500’s record performance, when measured in other major currencies, reveals a shift in the global financial system. Recent events are dispelling the illusion of US economic invincibility.

These trends are especially clear when viewed through a multidimensional national power index based on dozens of indicators such as demographics, technology, economy and military strength. My team at the Central Economics and Mathematics Institute of the Russian Academy of Sciences has developed a method to rank countries based on power.